Is Your Credit Score Not What It Seems?
An increasing number of New Jersey residents with good credit scores are applying for loans – and having their applications rejected.
A new report by the Consumer Financial Protection Bureau finds 20 percent of consumers, who purchase a credit score, likely receive a very different score from their potential lender.
Bruce McClary, the Media Director for ClearPoint Credit Counseling Solutions, says when consumers go to access their own credit reports they have a few different options for obtaining a score.
But when it comes to the lenders,”They are often times making their decisions not solely based on score you’re looking at as a consumer, but they have proprietary scoring systems that they use to determine the risk of lending money to the public…and those scoring systems may differ in some ways from the one that you’re looking at.”
He says this can result in someone who’s got a high credit score being turned down by a lender.
“Consumers are going to have to be prepared to face the situation by asking a lot of questions…They should ask what scoring model the lender using to make their decision, and it’s not just enough to know what the scoring model is, they also need to know what the scale is- what number constitutes good credit, what constitutes so-so, and what constitutes poor credit…They also need to know what does the score that you’re receiving mean in terms of the risk that you pose. If they give you a 25, what does that mean on their scale?”
McClary adds the main thing that consumers really need to focus on “is keeping their own credit healthy, and no matter what scoring system the lender is using- and how it differs from the one you’re looking at, the basics and fundamentals are still the same…So pay your bills on time, make sure that you check your credit frequently, so you can act quickly to fix mistakes or errors that might be bringing your score down.”
“You can check your credit report for free – once a year – from a website called annual credit report.com.”